Indeed, we believe that this move represents another example of irrationality in policy formulation - about which we have warned the Golding administration - and the danger of these colliding with broad national objectives.
While the administration has not put a cost to the decision to reduce for six months, the special consumption tax on motor vehicles by as much as 20 percentage points, it is reasonable to expect that it will forego many millions of dollars in revenue.
room for doubt
But by branding its action as a "stimulus package", the Government is implying that this is a good thing that will generate economic activity, at a time when it is needed. On this, there is much room for doubt.
But even if the purchase of SUVs, pick-up trucks and other vehicles does stimulate some economic activity, there are bound to be large question marks over whether this is how the administration can get the best bang for its buck. We approach the immediate issue from two fronts.
First, we note, like the Opposition, that the duty rebate is happening in the context of Jamaica's fiscal and balance-of-payments crisis that has precipitated the need for the country to borrow from the International Monetary Fund (IMF). Indeed, the Government is negotiating with the IMF for US$1.2 billion in credit.
wrong move
Second, the duty rebate is coincidental with the Government's borrowing of €67.5 million, or J$8.7 billion, to purchase 100 buses from Belgium for the state-owned Jamaica Urban Transit company, which projects that it will lose $1.37 billion this financial year.
Given the fiscal crisis, it would not be unreasonable should it be suggested that the bus deal be put on hold, rather than worsen Jamaica's already bad-debt profile, the servicing of which accounts for nearly 60 per cent of public expenditure. However, good, efficient public-transport systems tend to help productivity in economies - for all the obvious reasons.
In Jamaica's case, with not-so-good public transport and an energy bill last year of US$2.7 billion - transportation accounted for 22 per cent of the 26.4 billion barrels of oil consumed by the country - rationalisation makes sense. Then there is the fact that the country's roads are badly congested with, up to last year, over 420,000 vehicles - a number that is climbing at over 10 per cent a year. Yet, the Government can ill afford to expand or maintain a crumbling infrastructure.
Against that background, we understand the decision on the buses.
Yet, it is in this circumstance that the Golding administration announced its latest vehicle policy, which, if it works, will deprive the Treasury of cash, push demand for foreign exchange, place pressure on the Jamaican dollar, further undermine the road infrastructure, and spew more carbon into the atmosphere. The move, at best, will aid big-ticket consumption but hardly stimulate production.
When governments make obviously irrational decisions, there is usually a good explanation. And, mostly, it is not because they are stupid.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.